For-profit education company to forgo collecting loans, change practices in agreement with Alaska, 48 AGs

DOL Alaska's picture

January 7, 2019

(Anchorage, AK) – For-profit education company Career Education Corp. (CEC) has agreed to reform its recruiting and enrollment practices and forgo collecting more than $556.5 million in debts owed by 195,136 students nationally, in a settlement with Alaska Attorney General Kevin G. Clarkson and 49 other attorneys general.

The Assurance of Voluntary Compliance filed Wednesday caps a five-year investigation.

"Alaskans expect integrity and straightforward dealings when choosing where to pursue an education. This settlement reinforces our condemnation of misleading or deceptive practices in recruitment and enrollment in higher education," said Alaska Attorney General Kevin G. Clarkson.

CEC agrees to forgo any and all efforts to collect amounts owed by former students living in the states participating in the agreement. In Alaska, 322 students will get relief totaling $777,281.

Nationally, the average individual debt relief will be about $2,852.

CEC has also agreed to pay $5 million to the states. Alaska’s share will be $50,000.

CEC is based in Schaumburg, Ill., and currently offers primarily online courses through American InterContinental University and Colorado Technical University. CEC has closed or phased out many of its schools over the past 10 years. Its brands have included Briarcliffe College, Brooks Institute, Brown College, Harrington College of Design, International Academy of Design & Technology, Le Cordon Bleu, Missouri College, and Sanford-Brown.

A group of attorneys general launched an investigation into CEC in January 2014 after receiving several complaints from students and a critical report on for-profit education by the U.S. Senate’s Health, Education, Labor and Pensions Committee. The attorneys general alleged that CEC pressured its employees to enroll students and engaged in unfair and deceptive practices. These practices included making misleading statements or failing to disclose information to prospective students on total costs, transferability of credits, program offerings, job placement rates, and other topics.

As a result, some students could not obtain professional licensure and incurred debts that they could not repay nor discharge.

CEC denied the allegations of the attorneys general but agreed to resolve the claims through this multi-state settlement.

Robert McKenna, former Washington state attorney general and current partner at the San Francisco-based law firm of Orrick, Herrington & Sutcliffe, will independently monitor the company’s settlement compliance for three years and issue annual reports.

Relief eligibility

CEC has agreed to forgo collection of debts owed to by students who either attended a CEC institution that closed before Jan. 1, 2019, or whose final day of attendance at AIU or CTU occurred on or before Dec. 31, 2013.

Former students with debt relief eligibility questions can contact CEC.

The CEC investigation was led by Iowa, Connecticut, Illinois, Kentucky, Maryland, Oregon, and Pennsylvania. The agreement also covers the District of Columbia and the following states: Alabama, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

CONTACT: Assistant Attorney General Cynthia Franklin at (907) 269-5200 or cynthia.franklin@alaska.gov.

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Department Media Contact: Senior Assistant Attorney General Cori Mills at (907) 465-2132 or cori.mills@alaska.gov.

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